Weekly News 5/6/05 MAY 03, 2005 -- Nike Pulls Product From Sears Nike Inc. told Reuters that it will pull its products from Sears department stores in a move that analysts say blocks discount retailer Kmart from carrying the famous "swoosh" brand. The decision, which takes effect as of October 25, comes as the world's biggest athletic shoe maker looks to capitalize on growing demand for premium priced shoes like the Nike Shox sold in other retailers. It comes just weeks after Kmart bought Sears in a $12.3 billion deal that created the third-largest U.S. retailer, Sears Holdings Corp. "As of October 2005, Nike will no longer be selling product to Sears," Nike said in a statement responding to questions from Reuters. "This was a brand decision following a routine account review and the recent expiration of Nike's agreement with Sears." Sears said it planned to "continue talking to Nike," and noted that it still carries other brand-name athletic shoes including New Balance, Reebok, Adidas and Skechers. "Sears has a long-standing relationship with Nike," said Sears spokeswoman Lee Antonio. "We were surprised and, although we were disappointed, we respect their brand decision." Nike declined to say whether it would pull its products from other mid-priced chains such as Kohl's Corp., prompting some analysts to question whether the move was purely a strategic change or aimed solely at Sears. "I'm very surprised by this," said Anthony Chukumba, an analyst with Morningstar who follows Sears. "Sears has always prided itself on having name-brand athletic footwear including Nike, New Balance and Adidas. Clearly this hurts them." "Maybe this is Nike saying, 'I don't trust (Sears Chairman) Eddie Lampert and I don't know where the stores are going, so it's not worth taking the risk of damaging the brand image,'" he said. Sears recently began putting its exclusive Kenmore appliances and Craftsman tools in a handful of Kmart stores. Bringing those brand names to the discount stores was part of the rationale for Kmart's purchase of Sears in March. But for a company like Nike that is notoriously protective of its brand image, the prospect of its name-brand shoes showing up at Kmart would be unacceptable, analysts told Reuters. Champion Parent To Cut 350 Jobs Sara Lee Corp.'s apparel division, which includes the Champion brand, will offer incentives to cut about 350 positions as the division prepares for life as a spinoff company. "This is an opportunity for employees who may have been thinking about going on retirement, or relocating, or taking a career shift to get some benefits they wouldn't have if they resigned," spokeswoman Peggy Carter told the Associated Press. All 2,300 managerial, professional and support workers in the Winston-Salem based division are eligible for the packages that include health care, salary and continuing education, Carter said. The division also includes the Hanes, Bali, Playtex and L'eggs brands. About 60 jobs are vacant, Carter said. Another 290 employees will be eliminated either through the voluntary separations or layoffs. Employees in the division's manufacturing, distribution and retail stores were not affected. The cuts are part of changes taking place as the division prepares to be an independent, publicly traded company. Chicago-based Sara Lee's plan to spin off the branded apparel division between March and July 2006. After staff additions for functions like investor relations, treasury, and accounting compliance now performed by the Chicago-based parent, the apparel division expects to employ 5,200 people in the Winston-Salem area after the reorganization is complete in mid-2006. Last week, Sara Lee said that branded apparel's operating profit fell 36.4 percent in the three months ended April 2 because of high cotton costs, lower sales and the expense of phasing out a number of product styles. Brooks Launches Run World Run Video Brooks Sports has quietly launched a animated short called Run Workld Run. The short, available at www.runworldrun.com, was created by JohnsonSheen Advertising, takes viewers on a 90 second walk through life of a runner. The video incorporates vocals written by Chris Ballew and is animated by Matt Clark. Tamara Hills, Brook's corporate communications manager, says the short was created internally, and the vendor has only recently began sharing it with runners, members of the media, and other business partners. “We created it more as an energy thing internally and everyone just became so jazzed up about it that we began sharing it externally,” said Tamara Hills, Brook's corporate communications manager. “It's more of a thing wanted to pass along to others so they reminesence on their past and just enjoy it.” Hills says Brooks has no plans yet to use it formally in commercials. Click here so see the short on www.runworldrun.com Adidas-Salomon 1Q Sales Increased 11% 1Q05 net sales of Adidas-Salomon increased 11% on a currency-neutral basis with improvements coming from all regions. This represents growth of 10% in euro terms to EUR 1.778 billion in 2005 from EUR 1.623 billion in 1Q04. Gross margin improved 1.0 percentage point to 46.9% of sales from 45.9% in the prior year. Operating profit grew 27% to EUR 179 million in 2005 from EUR142 million in the prior year. Net income attributable to shareholders grew 46% reaching EUR 105 million from EUR 72 million in 2004. Diluted EPS grew 36% to EUR 2.15 from EUR 1.58 last year. The adoption of new and revised International Financial Reporting Standards (IFRS) concerning the inclusion of the operating items royalty and commission income and goodwill amortization into operating profit as well as the discontinuation of scheduled goodwill amortization positively impacted the Group's reported financial performce. On a comparable basis), the Group's operating profit, IBT and net income attributable to shareholders would have increased 17%, 20% and 26%. "Adidas-Salomon has got off to a powerful start in the first quarter of 2005," commented COB/CEO Herbert Hainer. "By every key measure - sales growth, margin improvement and profitability - we've delivered outstanding performance." Sales growth in the Adidas segment set the pace for Group performance. Currency-neutral Adidas revenues increased 11%. Drivers of this growth were significant increases in nearly all Sport Performance categories as well as strong double-digit growth in the Sport Heritage division. At Salomon, revenues decreased 8% on a currency-neutral basis. This decline was mainly due to lower sales in the inline skates, cycling components as well as most major winter sports categories. Revenues for TaylorMade-Adidas Golf increased 31% on a currency-neutral basis, mainly as a result of strong double-digit growth in the metalwoods, irons, golf ball and apparel categories. Currency effects negatively impacted sales at all brands in euro terms. Adidas sales in euro terms were up 10% to EUR 1.512 billion in the first quarter of 2005 from EUR 1.378 billion in 2004. Salomon sales in euro terms declined 9% to EUR 112 million. Sales in euro terms at TMAG grew 28% to EUR 149 million in 2005 from EUR 116 million in 2004. Brooks Partners With Los Angeles Triathlon Brooks Sports announced a new licensing agreement with the 2005 City of Los Angeles Triathlon The new partnership makes Brooks the Official Running Sponsor of the triathlon, which winds through some of the most star-studded streets in the world. As part of the partnership, Brooks will serve as the exclusive provider of running shoes and apparel, and will produce, design and market 2005 LA Tri licensed and running technical gear. “The Los Angeles Triathlon is one of the country's most unique tri events based on its famous point-to-point course, enthusiastic participants and superb organization,” said John Fendel, U.S. field marketing manager for Brooks. “We couldn't be more thrilled to support the triathlon and its participants as the event's official footwear and apparel sponsor.” Brooks/LA Tri licensed running equipment, featuring the event logo on Brooks' high-performance running apparel and accessories, will be available online prior to the race through www.LATriathlon.com, at the event Expo and near the finish line on race day. Licensed gear will become available in May for online pre-orders through early September. As part of their registration, all event participants will receive a technical Brooks Podium T made 100% moisture transfer polyester with a wicking finish. “Whether you want to complete your first triathlon or participate in an event you'll be sure to remember, the Los Angeles Triathlon delivers an experience like none other,” said Jack Caress, president of Pacific Sports LLC, which produces the Los Angeles Triathlon. “Brooks' participation will only enhance our triathletes' experience by inspiring them through innovative performance equipment and design.” The 2005 Los Angeles Triathlon will take place on Sunday, Sept. 11, and wind through renowned landmarks of greater Los Angeles, including Venice Beach, Sunset Blvd., and Hollywood Blvd.'s Walk of Fame. This year's event offers Olympic and Sprint Course distances, as well as various age divisions including the new Elite Olympic Age Group Competition Division. Visit www.LATriathlon.com for more information and race registration. New Balance Claims Marketing Reward For Chicago Marathon New Balance has received Silver Award from Event Marketer magazinea for its marketing efforts behind the 2004 LaSalle Bank Chicago Marathon campaign. The award, part of the magazine's 2005 Ex Awards, was received in the category of Best Activation of a Sports Sponsorship. GMR Marketing was the company's agency for the campaign. The 2005 Ex Awards drew a record-breaking 375 entries across 18 categories. A dozen brand-side judges screened the entries and scored them based on creativity, ideas, execution, and results. New Balance is the official shoe and apparel sponsor of The LaSalle Bank Chicago Marathon and has been an event sponsor since 1997. Saucony Grid Tangent Named “Editor's Choice" By Runner's World Saucony, Inc. said that the Grid Tangent has been awarded “Editor's Choice” by Runner's World in the magazine's Summer 2005 Shoe Buyer's Guide (June 2005 issue) hitting newsstands on May 3. The Grid Tangent, part of Saucony's new Fall 2005 offerings, builds upon an already award-winning line that reflects the brand's continued commitment to the runner. “A great new shoe … the Tangent is a durable, lightweight shoe with a touch of stability,” said the Runner's World editors. Saucony noted that every detail of the Grid Tangent is designed to provide a lightweight ride without sacrificing stability. To that point, the Tangent features a Stability Guide, providing support on impact, as well as Saucony's I-Grid molded midsole pillars to absorb and disperse shock. SRC in the heel and HRC in the forefoot offer additional shock absorption as well as lightweight cushioning. A blown rubber outsole ensures a lightweight ride while carbon rubber provides durability in high wear areas. According to the Runner's World editors, the Grid Tangent comes with a “nifty booty that provides a glove-like fit.” A lightweight, ultra-breathable mesh upper also helps keep feet cool and dry. “Though they're light, they have excellent cushioning and stability,” noted one wear-tester for the Runner's World review. “The Saucony team is thrilled to be recognized by Runner's World,” said Tom Carleo, vice president of marketing for Saucony. “The Grid Tangent incorporates several of our top technologies to deliver a shoe that is extremely light and responsive, yet incredibly supportive. Runners will love the Tangent for race day or fast training days.” The Grid Tangent is available in men's sizes 7-13 and 14, and in women's sizes 5-11 and 12. The Tangent retails at $100.00 and will arrive June 1st at participating retailers. In addition to the Grid Tangent winning “Editor's Choice” award, the Saucony Grid Trigon 3 “Ride” and “Guide” offerings were also selected for review by Runner's World. The Trigon, known as the pioneer of Saucony's Custom Ride Management (CRM), is now available in the neutral cushioning option (Ride) as well as a supportive cushioning option (Guide), with the added stability of a second density post. Both models of the Grid Trigon 3 are available in men's sizes 7-13 and 14, and in women's sizes 5-11 and 12. The Gird Trigon 3 Ride and Guide both retail at $90.00 and will arrive June 1st at participating retail stores. West Coast Bank To Sponsor Newport Marathon West Coast Bank is the presenting sponsor for the seventh annual Newport Marathon on Saturday, June 4. The company also funds and staffs a runner's aid station during the sold-out race, which draws contestants from all 50 states as well as Canada, Central America, Europe and the Far East. Commercial Banking Coast District Manager Janet Partridge said, "West Coast Bank is pleased to once again sponsor and provide volunteers for the Newport Marathon, which generates business for the local economy before summer break." Featured in Runners World magazine as one of marathon's five best-kept secrets, the race has grown to be the third largest marathon in the Northwest and is billed as "a big-city race in a small-town environment." Limited to 750 runners, the non-profit Newport Marathon also raises funds for the Lincoln County School District Track and Field. For more information, call Marathon Director Bruce Durkee at 541-265-3446 or www.newportmarathon.org.